🚨 Multi-Level Subcontracting Structure

Today Korean Social News for Beginners | 2025.08.04

0️⃣ Safety Management Blind Spots and Improvement Plans Revealed by Manhole Work Accidents

📌 "Manhole Work Deaths Trapped in Multi-Level Subcontracting"

💬 Over the past 10 years, the death rate from suffocation accidents during manhole work has been higher than overall confined space accidents. With 6 deaths this year alone, the multi-level subcontracting structure where main contractors give work to subcontractors, who then re-subcontract again, has been identified as the main cause. The government says it will clarify subcontracting restriction standards, but experts argue that manhole work itself should be designated as dangerous work to completely block subcontracting. At accident sites, work was re-subcontracted several times, and main contractors didn't even know the work was happening, showing urgent need for fundamental improvements in safety management systems.

💡 Summary

• Multi-level subcontracting structure is a complex outsourcing system where main contractors give work to subcontractors, who then re-subcontract to other companies.
• It's a major cause of blind spots in worker safety management due to scattered safety responsibilities.
• Following manhole work accidents, discussions about strengthening subcontracting regulations and designating dangerous work are becoming active.

1️⃣ Definition

Multi-Level Subcontracting Structure means a complex outsourcing structure where main contractors give work to first-level subcontractors, and first-level subcontractors then re-subcontract to second-level and third-level subcontractors. This is a system where main contractors don't do the work directly, but actual work happens through multiple levels of companies.

In this structure, the distance between main contractors and actual workers becomes far, safety management responsibility gets scattered, and safety investment becomes poor as each level tries to cut costs.

💡 Why is this a problem?

• Safety management responsibility gets scattered, making systematic safety management difficult.
• Safety investment decreases due to cost-cutting pressure at each subcontracting level.
• Main contractors find it hard to understand actual work situations, making quick responses difficult.
• When accidents happen, responsibility becomes unclear, which can delay damage compensation.

2️⃣ Current Status and Problems of Multi-Level Subcontracting

📕 Seriousness of Manhole Work Accidents

• Manhole work has a higher death rate than general confined spaces. Main current status includes:

  • Over the past 10 years, the death rate from suffocation accidents during manhole work has been higher than overall confined space accidents.
  • In 2025 alone, 6 people have died from suffocation during manhole work, with accidents continuing.
  • There's high risk of instant death from exposure to toxic gases like hydrogen sulfide and carbon monoxide.
  • Due to narrow space characteristics, rescue work is difficult, making the death rate high when accidents happen.

• Poor safety management due to multi-level subcontracting is serious. Main problems include:

  • Main contractors often don't even know that actual work is happening.
  • There's strong incentive to save on safety equipment and training costs at each subcontracting level.
  • Workers don't receive proper safety training or work without protective equipment.
  • Quick response systems aren't built for emergency situations.

📕 Structural Problems of Subcontracting Structure

• Responsibility avoidance and cost-cutting pressure create a vicious cycle. Main causes include:

  • Main contractors prefer subcontracting to avoid legal responsibility.
  • Since each subcontracting level must make profit, actual work costs keep decreasing.
  • Final work companies must work with extremely low prices, leaving no room to invest in safety.
  • Low-price bidding is prioritized over work quality and safety.

• Limitations of current legal systems are being revealed. Main problems include:

  • Standards for 'capability' when subcontracting under the Occupational Safety and Health Act are unclear.
  • Manhole work isn't designated as dangerous work under the Dangerous Work Outsourcing Prevention Act.
  • Though the Subcontracting Transaction Fairness Act has approval duties, actual management and supervision are lacking.
  • Responsibility scope and punishment levels when accidents happen are insufficient, limiting prevention effects.

💡 Main Risk Factors of Multi-Level Subcontracting

1. Scattered Safety Responsibility: Unclear safety management responsibility between main contractors and subcontractors
2. Information Disconnection: Main contractors find it hard to understand actual work situations
3. Cost-Cutting Pressure: Poor safety investment due to profit-seeking at each level
4. Lack of Expertise: Insufficient safety management capability of re-subcontracting companies
5. No Emergency Response System: Difficult quick rescue and response when accidents happen

3️⃣ Government Measures and Legal System Improvement Direction

✅ Current Legal Systems and Improvement Plans

• Occupational Safety and Health Act revision is being pushed forward. Main improvement directions include:

  • Plans to prepare specific standards and procedures for 'capable business owners' when subcontracting.
  • When selecting subcontracting companies, comprehensive evaluation of safety management capability and past accident history will be required.
  • Plans to strengthen main contractors' safety management supervision duties and increase punishment for violations.
  • The government says it will clearly define safety responsibilities at each level of multi-level subcontracting.

• Expanded application of the Dangerous Work Outsourcing Prevention Act is being reviewed. Main content includes:

  • Plans to expand the scope of dangerous work, currently applied only to some work like plating and lead smelting.
  • Reviewing plans to designate confined space work including manhole work as dangerous work.
  • When designated as dangerous work, subcontracting itself will be completely prohibited or strict conditions imposed.
  • Experts argue that work directly connected to life should be performed directly by main contractors.

✅ Labor and Expert Opinions

• They're demanding abolition of the subcontracting structure itself. Main arguments include:

  • Labor groups demand complete prohibition of subcontracting for dangerous work.
  • Academia has analyzed that multi-level subcontracting structurally cannot guarantee safety.
  • There's strong opinion that work directly connected to life, like manhole work, should be directly handled by main contractors.
  • They say policies are needed to completely block outsourcing of dangerous work, referring to overseas cases.

• Step-by-step improvement plans are also being suggested. Main plans include:

  • First, special safety standards for manhole work should be prepared and mandatory training strengthened.
  • Subcontracting levels should be limited and main contractors' prior approval should be mandatory for re-subcontracting.
  • Main contractors' legal responsibility should be strengthened when accidents happen to encourage actual safety management.
  • Certification systems and incentives for companies with excellent safety management are also needed.

4️⃣ Related Terms

🔎 Main Contractor

• Main contractors are companies that make initial contracts and oversee entire construction or work.
  • Main contractors are companies that receive construction or services directly from clients (government, public companies, private companies, etc.) and manage entire projects. In construction, general construction companies often serve as main contractors, and in manufacturing, finished product manufacturers often serve as main contractors.
  • Main roles of main contractors include: First, overseeing overall project planning and design. Second, handling selection and management of subcontractors. Third, taking final responsibility for quality control and safety management. Fourth, guaranteeing contract fulfillment with clients.
  • Under the Occupational Safety and Health Act, main contractors must also take responsibility for safety and health at subcontracted worksites. Especially for dangerous work, they have duty to guarantee safety of subcontractor workers and can face legal responsibility when accidents happen.

🔎 Dangerous Work Outsourcing

• Dangerous work outsourcing means the practice of passing dangerous work to subcontractors.
  • Dangerous work outsourcing means main contractors giving dangerous and difficult work to subcontractors to avoid their own safety responsibility. This causes subcontractor workers to work in more dangerous environments and increases industrial accident risks.
  • Reasons why dangerous work outsourcing is problematic include: First, subcontractors often lack safety management capability and resources compared to main contractors. Second, there are structural problems of reducing safety investment due to low-price bidding. Third, accident risks increase as main contractors' safety management supervision becomes poor.
  • To prevent this, the 'Dangerous Work Outsourcing Prevention Act' (predecessor of the Serious Accidents Punishment Act) was implemented in 2020. This law prohibits or restricts subcontracting for specific dangerous work and strengthens main contractors' safety management responsibility.

🔎 Confined Space

• Confined spaces are spaces with suffocation risk due to oxygen deficiency or toxic gases.
  • Confined spaces are places large enough for workers to work but with restricted entry and exit, and insufficient natural ventilation, creating risks like suffocation due to oxygen deficiency or harmful gas accumulation. Manholes, tanks, storage facilities, and sewers are typical examples.
  • Main risk factors in confined spaces include: First, suffocation risk when oxygen concentration drops below 18%. Second, toxic gases like hydrogen sulfide, carbon monoxide, and methane can accumulate. Third, explosion risks from flammable gases also exist. Fourth, quick rescue is difficult in emergency situations due to narrow space characteristics.
  • The Occupational Safety and Health Act requires prior oxygen concentration measurement, forced ventilation, safety supervisor placement, and personal protective equipment when working in confined spaces. However, in multi-level subcontracting structures, these safety rules aren't properly followed, causing frequent accidents.

5️⃣ Frequently Asked Questions (FAQ)

Q: Why is multi-level subcontracting used so much?

A: It's widely used for reasons like main contractors' cost reduction, risk avoidance, and securing expertise.

• From main contractors' perspective, there are several advantages. First, they can save labor costs and management expenses compared to direct employment. Second, they can partially avoid legal responsibility when accidents or problems happen. Third, they can use expertise from specialized companies in fields requiring specialized technology. Fourth, they can flexibly adjust workforce according to economic changes. Fifth, they can increase efficiency by focusing on core work while giving secondary work to outside companies.
• However, these advantages often come at the cost of workers' safety and rights, which is problematic. Especially for dangerous work where safety is important, life protection should come before cost reduction, so regulations on subcontracting structures are being strengthened.

Q: Who takes responsibility when accidents happen during subcontracted work?

A: In principle, main contractors and subcontractors share responsibility, but in reality, responsibility is complexly intertwined, which is problematic.

• Legally, according to the Occupational Safety and Health Act, main contractors must also take responsibility for safety at subcontracted worksites. Especially for dangerous work, main contractors can be punished if they don't fulfill safety management supervision duties. Subcontractors also have direct safety management responsibility for their own workers. However, several problems occur in reality. First, in multi-level subcontracting, each level tries to pass responsibility to others, making clear responsibility identification difficult. Second, main contractors often don't know actual work situations, so they don't properly fulfill management supervision duties. Third, final subcontractors are often small with insufficient compensation capability.
• To solve these problems, the government is reviewing plans to further strengthen main contractors' responsibility and have main contractors primarily compensate when accidents happen. Policies to completely prohibit subcontracting for dangerous work and have main contractors take direct responsibility are also being pursued.

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